Searches by Income Tax officials on three Mangaluru and Udupi-based groups involved in fish processing has led to unearthing of undisclosed income to a tune of Rs. 195 crore (30,310,800 USD), and detection of violation of Prohibition of Benami Property Transaction Act, 1988, Customs Act, Income Tax Act and Black Money and Imposition of Tax Act. Apart from the groups, agents who help the companies to procure raw fish were also searched while end users of the processed food were also verified.

The searches conducted on 20 premises and surveys conducted on 23 premises across five States last Thursday by nearly 150 IT officials was based on a detailed and discrete enquiries for more than three months to identify the modus operandi of various fish processing units. While Rs. 195 crore of undisclosed income has been found, Rs. 88 lakh unaccounted cash has been seized. The department, a release said, expected the quantum of undisclosed income to go up as it plans to investigate all related parties and concerns, bank transactions in India and abroad, and also investments made abroad.

A release said that during searches of premises it was found that the processing units, with the help of agents, are showing huge bogus creditors in the name of fishermen. It said that huge cash was being paid to agents in the name of fishermen, violating the provisions of Income Tax Act. “It was also noticed that various benami entities were floated in the name of relatives and employees to make unaccounted investments, in violation of Prohibition of Benami Property Transaction Act, 1988,” the release said.

It said that processing units were importing fishmeal and the same was re-exported for making false claim of duty drawback, and plant and machinery imported was under invoiced, causing loss of customs duty, all of which were in violation of the Customs Act.

Further, the release said that in some instances it was found that commission is being paid by a Chinese company to Indian middlemen outside India, and the same was routed through hawala channels to Dubai, Oman, Mauritius, and Middle East and African countries. During searches, foreign account details and foreign investments, in violation of Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, were also found.

The Income Tax sleuths also found that many agents and processing units split their income in the name of relatives, employees and fictitious entities in violation of Income Tax Act while some fishermen were under the impression that their income is exempt like agriculture income, which is not true. The release also said that these processing units maintained posh guest houses to extend hospitality to persons with whom they deal with.